Businesses involved in the provision of healthcare often become lifeboats for worried investors in uncertain times. Georgia Healthcare Group (LSE: GHG) though, has experienced no demand surge for its shares amid the broader stock market crash. In fact its shares have fallen a third in value since the sell-off began in late February.
I find this reversal hard to fathom. I also consider it a brilliant buying opportunity for savvy investors. At current prices, Georgia Healthcare carries a low forward price-to-earnings (P/E) multiple of around 7 times.
Global and regional recessions lead to a sharp spending reduction on a variety of goods and services. Our demand for medicines and healthcare are one of the last things to fall, though. And as a major provider of such services, Georgia Healthcare is in great shape to ride out a sharp slump in the eurasian county’s GDP.
This small-cap company runs hospitals and clinics in Georgia, where it is benefitting from an upswell in domestic patient numbers as well as the growing trend of ‘medical tourism’ from international clients. It provides pharmaceutical services to keep Georgians well supplied with medicines, too, and provides medical insurance cover and diagnostics services as well.
Georgia Healthcare is well placed to benefit from strong domestic economic growth during this decade and beyond. And ongoing expansion (such as the two state-of-the-art hospitals it opened in 2019) will provide the bottom line with an extra boost in the coming years. I reckon it’s too good to miss following the recent stock market crash.
Another great buy after the crash
Devro is another small cap that looks too cheap right now, in my opinion. While the Covid-19 crisis has whacked trading for many global businesses, trade at the sausage casings maker has remained unaffected. It’s why it kept its predictions of “good progress” in 2020 unchanged when it updated the market in late April.
Food producers and those involved in the food chain have obvious defensive qualities. Yet in my opinion these are not reflected in Devro’s rock-bottom forward P/E ratio of 10 times. It’s a reading that also fails to recognise the brilliant global sales opportunities that its Devro 100 transformation programme is beginning to reveal, too.
Throw a 6% dividend yield into the equation and I reckon this is a brilliant stock to buy today.
I’m particularly excited by the small cap’s huge potential in emerging regions, where rising wealth levels allied with rampant growth is supercharging demand for high-protein foods like meat products. To illustrate the point, Devro saw sales to developing markets like Latin America, Russia, and parts of Asia rocket 13% year on year in the first quarter. Like Georgia Healthcare, I’d happily add this under-the-radar stock to my ISA today.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Devro. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.